FINANCIAL INFORMATION
PTC

Chairman's Speech at 10th AGM of PFS held on 28th September 2016

Ladies and Gentlemen,

I am pleased to welcome you all to the 10th Annual General Meeting of PTC India Financial Services Limited (PFS). I would like to thank you all for the confidence reposed by you and the support extended to the Company. It is your confidence and support that enables us to grow and perform year after year. I am happy to share with you that the Company continued with its growth momentum in the financial year 2015-16 as well.

The Financial Statements for the year ended 31st March 2016 along with the Directors’ Report and Auditors’ Report have already been circulated to you. With your permission, I would like to take them as read

Macro Overview

India is among the fastest growing countries of the world and one of the few countries that have the potential to continue to grow in a sustained way. The savings and investments rates are positive and encouraging. The power sector continues to play an important role in the growth and development of the economy. The sector is redefining itself and is undergoing transformation, which is being acknowledged globally. The power industry is working towards becoming more affordable and reliable amidst increasing energy use in the country.

The overall installed capacity increased to about 298 Gw as at the end of March 2016. Sustained economic growth continues to drive power demand in India. The Indian power sector has tremendous investment potential and provides immense opportunities in power generation, distribution, transmission, and equipment. The sector remains attractive, given the country’s growing demand for electricity. The Government is committed to create a progressive and enabling environment and is taking a number of steps and initiatives in order to achieve India's ambitious renewable energy targets of adding 175 GW of renewable energy, including addition of 100 GW of solar power. India is on the forefront of the development of renewable projects globally and is being ranked among the topmost countries globally witnessing increased investments, development and job creation in the renewable energy space.

Operational Highlights

During FY2015-16, your Company recorded highest ever debt sanction and disbursements. Your Company sanctioned debt assistance aggregating to Rs.65,283 million to 66 projects compared to Rs.41,128 million in FY2014-15, thus recording an increase of about 59% during 2015-16. The Company has been increasing its presence in the renewable space and of the debt sanctioned in FY2015-16, over 75% assistance was to renewable projects predominantly solar and wind. The disbursements during 2015-16 aggregated to Rs. 35,550 million compared to Rs. 24,927 million during 2014-15. The cumulative aggregate debt assistance sanctioned by the Company as at 31st March 2016 exceeds Rs.150 billion. It is noteworthy to mention that debt sanctioned to renewable projects constitutes more than half of your Company’s sanctioned portfolio as at 31st March 2016 with aggregate sanction of Rs. 79,190 million. At the same time, your company has started diversifying its portfolio by lending to other vital infrastructure projects like port & roads. In the coming years we endeavor to achieve a balanced portfolio.

The year 2015-16 is witness to another milestone in your Company’s journey. Your Company became the first institution in India, and the twenty-sixth globally, to sign the Master Cooperation Agreement with International Finance Corporation. The Master Cooperation Agreement is aimed at standardizing steps that lenders take when co-financing projects with IFC and shall help in reducing the financing costs for borrowers and the borrowers shall also have the assurance of global best practices including IFC’s environmental and social guidelines.

During FY2015-16, your Company has raised long term resources through issuance of Non-Convertible Debentures (NCDs) – Series 4 by way of private placement for Rs. 2,135 million which were subscribed by International Finance Corporation. The Company also raised money through issuance of Non-Convertible Debentures (NCDs) – Series 5 by way of private placement for Rs.1,500 million which was subscribed by FMO, Dutch Development Bank. Both the issuances augment the long term resources of the Company and will help in lowering the cost of funds of the Company.

During the year, PFS signed a Memorandum of Understanding with India Infrastructure Finance Company Limited (IIFCL) to provide financing for infrastructure projects in India. PFS and IIFCL will come together to provide a single window to promoters of Infrastructure projects particularly in energy value chain and facilitate their financing in India. Both companies will collaborate to provide credit enhancement facility to various projects to enable their financing at competitive rates, apart from collaborating in areas of mutual interest towards service to infrastructure sector.

PFS also introduced Credit Enhancement Scheme as part of its efforts to step up lending to quality infrastructure projects in the country. As part of the scheme, PFS will offer credit guarantee after detailed appraisal to eligible projects along with other financial institutions for providing partial guarantees for projects and the same shall be backed by adequate security.

Performance Highlights

Your Company completed another year of continued progress and growth in operations and financial performance. The total income for FY 2015-16 stood at Rs.11,869.28 million recording a growth of 48%, compared to Rs. 8,019.07 million during 2014-15. The income mix changed during the year. Your Company earned a revenue of Rs.2, 069.28 million by way of sale of one of its equity investment which accounted for about 17% of total revenue. The interest income for the year continued its upward trend with a growth of 24% and stood at Rs. 9,214.08 million during 2015-16 compared to Rs.7, 416.15 million during 2014-15.

With the growing trend and growth in the portfolio, the borrowings of the Company also increased. Finance costs increased to Rs.5,301.08 million during 2015-16 from Rs.4,171.92 million during 2014-15. The total expenditure for the year increased albeit at a lower rate. The total expenditure for FY 2015-16 stood at Rs.6554.86 million recording a growth of 18%, compared to Rs. 5565.93 million during 2014-15. Your company has been successful in maintaining competitive net interest margins and spreads compared to its peers.

Profit before tax (PBT) stood at Rs.5,314.43 million during 2015-16 as compared to Rs.2,453.13 million during 2014-15. Profit after tax (PAT) stood at Rs.3,910.97 million during 2015-16 as compared to Rs.1,608.76 million during 2014-15.

The gross loan book stood at Rs.86,340 million as at 31st March 2016 and the equity investments made by the Company aggregated to another Rs.2,004 million as on the said date. I am happy to share that the renewable portfolio constitutes the highest portion of the PFS’ debt portfolio at around 44% comprising largely solar and wind projects.

Given the robust performance in your Company during the year, the Board of Directors of the Company have recommended a dividend @12% i.e. Rs. 1.20 per share for the financial year 2015-16.

Credit Rating

The credit rating agencies have also maintained their view about your Company and its robust business strategy along with its healthy earnings profile. Crisil has assigned its highest rating “CRISIL A1+” to the Commercial Paper Programme of PFS and ICRA has assigned its highest rating “ICRA A1+” to the short term loans availed from banks. Long term instruments are rated “CRISIL A+/Stable” by Crisil, “ICRA A+(Positive)” by ICRA, “CARE A+” by CARE and “BWR AA (Stable)” by Brickwork.

Corporate Governance

Your Company is committed to maintain the highest standards of Corporate Governance. A diverse composition of your Company’s Board of Directors, providing timely and accurate information to the Board and its Committees, transparency and fairness in all dealings, appropriate disclosures, compliance with applicable laws and regulations, internal controls, ethical behavior, all converge to meet the ultimate objective of maximizing the shareholders’ value. Being an infrastructure finance Company, PFS regularly pursues businesses that maximize returns while effectively managing the inherent risks. Decision making and execution is driven by its governance structure, ethics and value systems. PFS’s philosophy of Corporate Governance embodies the dual goals of protecting the interests of all stakeholders while respecting the duty of the Board and Senior Management to oversee the affairs of the Company and promote long-term growth and profitability.

Corporate Social Responsibility

Your Company is committed towards ensuring its contribution to the welfare of the communities in the society in which it operates. Your Company aims to fulfill its social responsibilities for making a positive difference to society through various initiatives as per the relevant provisions of the Companies Act, 2013 and Corporate Social Responsibility (CSR) Policy of the Company. The Company aims to consistently pursue the concept of integrated development of the society in an economically, socially and environmentally sustainable manner and at the same time recognize the interests of all its stakeholders. CSR is a long-standing commitment at your Company and the CSR Policy of your Company sets the framework guiding the CSR activities of the Company. It outlines the governance structure, operating framework, monitoring mechanism, and CSR activities that would be undertaken. The CSR Committee is the governing body that defines the scope of CSR activities and ensures compliance with the CSR Policy.

During the year, your Company incurred a sum of Rs. Nil towards CSR related activities. However, the entire unspent amount of Rs.78.18 million is being carried forward for utilization in future years. The Company aims that CSR endeavor be carried out meaningfully ensuring active compliance with the letter and spirit of the law and ethical standards furthering social good.

Appreciation

I would like to sincerely thank you all on behalf of Board of Directors of the Company and on behalf for PTC India Limited – the Holding Company. We are also grateful to Ministry of Power, Ministry of Finance, Ministry of New & Renewable Energy, Reserve Bank of India, SEBI, NSE, BSE, investors, banks, financial institutions in India and abroad and the esteemed promoters of our assisted projects for their continued support and confidence. I extend my sincere thanks to my colleagues on the Board for their involvement and mature counsel. I would also like to acknowledge the contribution of employees of PFS for their hard work, professionalism and commitment towards the Company. In the coming years, we and the Company would continue to remain committed to meet the expectations of all the stakeholders.

Thank you, Ladies and Gentlemen.

Deepak Amitabh
Chairman

PTCPTC
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